I was listening to a podcast and the guest was saying you can't get a loan for a property for an LLC. So my question is, how do you purchase a property if there are more than two parties involved for an investment? My brother and I want to purchase something together but I'm not sure how to structure it...Thanks!
The guest was probably talking about traditional - bank - financing. LLCs get loans every day.
There are other types of entities, of course. Your RE attorney should be able to guide you, or a tax attorney.
@Krista Walker you cannot qualify for a conventional mortgage (i.e. the kind of mortgages people typically use to buy their primary home) if the property is owned by a corporate entity such as an LLC, rather than owned personally. If a property is titled in the name of a corporate entity vs. a person, you would have to get a commercial loan to acquire the property - and banks do this all the time. Terms are usually a little different than what you would get on a conventional residential mortgage.
Thanks, @Geoff Anderman. So it's possible, but the terms aren't as good.
How do most REIs get around this? Or do they just bite the bullet and buy with not as good of terms?
We buy everything in an LLC. Would never make an investment in the name of a partnership. Too much risk. The first step is to develop a relationship with your banker(s). Good luck.
Thanks, @Al Wilson. I guess I need to start somewhere. I know I need to speak to a RE attorney, but thought I would try and get some info first.
Partnerships are risky. In a partnership you are responsible for what your partner does.
@Krista Walker I think @Al Wilson is right - I would reach out to commercial loan officer at a smaller/community bank local to the area in which you are investing. Make contact and ask them about what they look for in terms of commercial real estate loans. They will give you a sense for their typical terms and also what they look for in terms of underwriting guidelines.
Re you earlier question - I would definitely talk to a local real estate attorney who can make some good suggestions on how to structure things with your potential partner.
Thanks, @Geoff Anderman. My next burning question is...how come I can't get names to highlight when I put @ in front of their name?! Agh, such a newbie!
My friend and I want to buy a rental property together. I heard that we should initially do so in our own names, and only later change to an LLC. Is that correct? How do we buy one property together as friends? Meaning, do we each take out our own loan or do we have to take out a loan together? New to this. Would appreciate some guidance. Thank you!